Summarize this article in:

When that happens, you need to bite the bullet and accept the consequences — which may turn out to be an IRS installment agreement. Then you can pay the service until you’ve settled your debt. Charges you most likely incur include:

• Accrued interest as high as 8 to 10 percent that begins on April 15, no matter if you filed for an extension or requested an IRS payment arrangement
• Penalties such as: 0.5% of the tax you owe that’s not paid by due date, April 150.25% during an approved IRS installment agreement if your tax return was filed in a timely manner and the return is for your personal taxesA recurring charge levied on the unpaid taxes you owe each month or for part of the month after the due date, until the amount you owe is paid in full or the penalty reaches 25%
• Future refunds held by IRS until the amount you owe is fully paid
• Processing fees that could be as high as $3.95 per payment
• A $149 setup fee for the IRS installment payment plan
• A user fee, which for 2019 taxes is $52 if you set up a direct debit plan and $105 for a non-direct debit agreement — payroll deductions can be set up for a user fee of $225
• Potential problems obtaining a loan while you carry an outstanding IRS debt
• Lowered credit score due to the money you owe, even as you continue to make payments

Setting up an IRS Installment Agreement

When it’s determined that you owe taxes to the IRS, you have a few options:

• Pay the amount in full by April 15.
• Make a short-term IRS payment arrangement for fewer than 120 days.
• Enter into an IRS installment agreement when you need longer than four months to pay it all.

Individuals can set up a short-term IRS payment arrangement online if you owe the government less than $100,000, which includes the tax, plus penalties and interest. You can make the arrangements for an IRS installment agreement online if your total debt is $50,000 or less.

If you’re requesting more time to pay your business taxes, you can set up a long-term IRS installment agreement payment plan online when your balance is $25,000 or less. Independent contractors and solo proprietors file as individuals.

If you owe more than the maximum allowed for an online payment agreement (OPA) or otherwise aren’t eligible to apply online, you still may be eligible for an IRS installment agreement. You just have to fill out the paper forms, attach documentation and mail it in. Setup fees may be higher than if you rely on electronic applications for extended payment plans.

If you want professional assistance in setting up IRS installment agreement our CPA professionals at Sarasota accountant office can help you with all paperwork.

How It Works

Once you’ve filed an application for an IRS installment agreement payment plan, they generally let you know within 30 days whether you’ve been approved or not. But if you wait until after March 31 to make the request for taxes due on April 15, you may have to wait longer for an answer. Once you’re approved, you’ll get a notice with the details of how much you need to pay each month, along with the due date. You’ll also get your bill for the user fee.

If you’ve set up a non-direct payment agreement, you get a notice each month that shows the remaining balance, as well as the date and amount of your next due payment. You don’t get notices for automatic payments, also called direct payments. Either way, every year, you get a statement showing the payments you’ve made.

Making Changes During Your Repayment Period

The IRS isn’t completely heartless; they allow for changes to be made during the life of your IRS installment agreement. But you better believe you’ll pay for them. For an $89 fee, you can change the amount of your monthly payment, the due date or make a conversion to a direct or non-direct payment.

If you’ve let your IRS installment payments lapse, you can apply to have your agreement reinstated for a larger fee. If you request a smaller monthly payment, note that it may be denied. An online prompt tells you when you reached an acceptable threshold. You can continue to ask that the changes be initiated.

Caveats to the IRS Installment Agreement Payment Plan

When you make a request for an IRS installment agreement on time and in good faith — and you meet the financial requirements — you have a good chance of getting your request approved. You can even pay off the balance ahead of time with no penalty, which also saves money in accrued interest.

A few warnings before you take the steps and apply for the payment plan:

• You must not already owe back taxes from previous years.
• You agree to pay your taxes on time in the future, even if you’re still making IRS installment payments.
• You arrange to have sufficient withholdings taken out of your paycheck or you pay enough in quarterly tax payments to cover any future tax obligations.
• You agree to have any future tax returns applied to the outstanding debt.
• You continue to make your monthly IRS installment payment even when you have a refund applied.
• You pay interest and possibly even a late payment penalty on taxes that aren’t paid by the due date, even when you’ve been granted an IRS payment arrangement.
• You must respond to requests for financial updates when the IRS requests them, or your IRS installment agreement may be terminated.

If you stop making monthly payments, you’re subject to possible:

• Tax liens
• Paycheck garnishment
• Collection action
• Legal troubles that could include jail time

Avoid paying more than your fair share and do your best to pay your taxes on time. With the assistance of a qualified accountant experienced in tax law and IRS payment arrangements, you’ll know what to do every step of the way. Your tax accountant can even file the necessary paperwork for you.

If you’ve reached the point where you need to seek an IRS installment agreement payment plan, consult with your accountant or trusted tax advisors about the appropriate tax withholdings or quarterly payments you need to make to avoid it in the future. In New York City, Sarasota, FL and Washington, DC, rely on the expertise of seasoned tax accountants who keep up with all the current tax laws at Miller & Company, LLP.

Paul Miller is the best tax accountant in NYC, one of the few New York accountants who look beyond the page to find how your business and lifestyle can work together in ways you never imagined. Top rated CPA firm in NYC Miller & Company of New York finds solutions with a right combination of creative ideas that let your wealth work for you, not against you. 

Summarize this article in:

Tax season is finally over! You’ve dutifully turned in all your receipts to your personal NYC CPA on time, and you’ve received good news. Perhaps one of these scenarios is familiar:

• You don’t owe any money to the IRS.
• You owe an amount that’s considerably lower than you imagined.

All is well in the world and with your business. Then you receive a letter from the IRS. If you’re like many wealthy and successful business owners in Manhattan, you may feel a chill run up your spine before you even open the envelope.

It’s OK. If you were holding your breath, let it out and breathe normally. Slow your heart rate. The Internal Revenue Service itself recommends on its website that — in the event you receive an IRS letter — don’t panic!

Miller & Company, a leading tax accounting firm, offers many services to prevent an IRS audit and assist you in the event of one. Miller & Company LLP, NY Certified Public Accountants, a best rated NYC CPA firm.

Why Me?

You may receive a letter from the IRS for a number of reasons, not all of which mean dire consequences:

• They need more information
• A correction was made to your return
• You owe them money
• They owe you money
• They need a signature for a third-party authorization
• Your identity needs to be verified
• You’re being audited

Carefully read the letter to make sure you understand its contents. Most requests from the IRS are pretty basic. All you need to do is follow the directions contained in the letter and provide the required information. Very often, there’s a “respond by” date within the letter, and it’s best if you follow those directions to:

• Avoid mounting fees and penalties
• Leave yourself open for further appeals, if necessary

Who You Gonna Call?

No matter how simple their request, when you receive a letter from the IRS, you should contact your tax CPA to ensure you’re protected and reading the notice correctly. You don’t want to miss any important deadlines just because you misread a bureaucratic notice. Even if the directions are straightforward and clear, keep a copy of the letter and your response for your accountant’s records. The issue may be one that you can avoid in the future.

When you receive a letter from the IRS that includes findings with which you disagree, contact your tax CPA immediately. The expert CPAs at Miller & Company can provide you with copies of the documents you need to prove your case or handle the request directly. The most important thing to remember is to meet deadlines at this juncture. Once you’ve submitted your dispute, the IRS then has 30 days to respond.

The Dreaded Audit

You must receive a letter from the IRS if you’re going to be audited — they won’t contact you by any other means. This also requires an immediate call to your CPA, who most likely can put your mind at ease. Audits usually are selected at random based on statistical models. Audits also are common when your business partner or investors are being audited.

No matter why you were chosen, your personal business accountant at Miller & Company can often handle it without your involvement. You can go about taking care of your business and your personal wealth, knowing that you’ve chosen an accountancy firm that firmly has your back — in all situations.

Do you have any questions about services we offer including IRS Audit in NYC and Long Island? Would you like to receive a personal IRS Audit consultation customized to your specific needs? To schedule an appointment with a nationally recognized, leading accountant, Paul Miller of Miller & Company LLP firm, please contact our Queens or NYC tax accountants for a CPA consultation.